A New Child Means Lots of New Expenses

By David Dierking

OK, the good news first. My wife and I are expecting our second child literally any day now. It’ll be our second daughter. We’re over the top excited and can’t wait to meet her!

Now for the bad news. This is going to cost us a lot of money. After realizing we were going to be parents for the first time, I distinctly remember the overwhelming fear of wondering how we were going to pay for food, clothes, a crib, doctor’s appointments, hospital stays and college. With one at home already, our costs this time around shouldn’t be quite as high yet they’ll still be high enough to put a dent in our wallet.

This is what we’re expecting with the arrival of our second child.

Delivery

With our first daughter, the total cost of delivery including the hospital stay ran us about $15,000. Our insurance covered about 90% of that so our out of pocket cost was about $1,500.

I’m sure medical costs have gone up in the last three years. Plus, if my wife needs a C-section the cost could go way up.

Estimated Cost – $2,000

Housing

A lot of people will upgrade the size of their house with the arrival of a newborn and that results in an increased mortgage payment.

We moved into a 4 bedroom house before our girls were even born so we’ve become accustomed to our mortgage payment for a while. While some people will need to add several hundred dollars a month to their mortgage payment to afford a house big enough for everyone, we’ve already got all the space we’ll need.

Estimated Cost – $0

Food

If you’re formula feeding your infant, you can easily spend between $15 and $18 per one pound can. That can easily add up to $100-$200 a month in food for your newborn.

Fortunately for us, my wife is a real trooper. She breastfed our first daughter until she was almost a full year old and plans on doing the same for as long as she can for our second child.

Estimated Cost – $0

Clothing

Having a second daughter means hand-me-downs from her older sister. And we’ve got baskets of them so we won’t need to buy much in the way of clothing for a while.

Estimated Cost – $0

Health Care

Outside the cost of the delivery and hospital stay, the baby is going to need regular check-ups and well care visits to the doctor. Our health insurance is pretty good about covering those so the impact should be fairly minimal as long as something out of the blue doesn’t come our way.

Estimated Cost – $100 per month or $1,200 per year

College

The amount we could save for our newborn’s college education could run anywhere from a few dollars a month up to $1,000 depending on where we think she might go to school. For now, we’ll assume she’s headed to a 4-year public school.

We also want her to contribute toward some of her college education costs so we’ll contribute enough to get the account off the ground and going.

Estimated Cost – $100 per month or $1,200 per year

Maternity Leave

We didn’t fully appreciate the impact of this until we actually experienced it. My wife’s maternity leave policy will cover 100% of her pay for up to six full weeks under the company’s short-term disability policy. She’ll be taking the full 12 weeks off after the birth so that leaves an additional six weeks where she won’t get paid a dime.

At her salary, that works out to pretax earnings of over $8,000. After taxes, 401(k) contributions and such, we would have received about half of that in take home pay. Still, that’s a big chunk of money that we’ll have to do without.

Estimated Cost – $4,000

That makes the total damage about $8,400 in the first year. And ours is probably a fairly average sample. We will probably lose more in unpaid maternity leave than many but we also save on the costs of food and clothing. Plus, if our insurance didn’t cover as much as it did, the medical costs could be significantly higher.

Thankfully, we walked through this exercise a few months ago so this didn’t catch us off guard. Unfortunately, we made the choice to temporarily lower our 401(k) contributions to make up the immediate shortfall. Not an ideal situation but we anticipate getting them back to where they were within six months.

By then we’ll see how good our ability to prognosticate really was!

Photo credit: chospatis

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Author Info

This post was written by David Dierking. David lives outside Milwaukee, Wisconsin and has been working in the financial services industry for over 13 years with a background in investments, accounting, and marketing. He earned his Chartered Financial Analyst designation from the CFA Institute in 2004 and was recently published in the Milwaukee Business Journal. You can also check him out at
The Ultimate Fit Challenge

I wouldn’t discount a clothing budget. I just had a second baby girl too. She was born at the end of March. My older daughter is about 18 months older and born in September. Right now, she is able to wear her sister’s hand-me-downs, but I anticipate that I will need to buy winter clothes for her as I don’t think it would be great to give her t-shirts when it is below freezing outside. You also can’t assume that your children will be built the same. My first was VERY chubby. This baby, at 7 weeks old, weighs more but is more long and lean. This means she is outgrowing some of her sister’s clothes by length at a crazy pace. At this rate, she will be into her sister’s sweaters and overalls in the middle of summer!

For completeness, you might want to take into account the extra utility bills with a new baby. I have to do a wash every day from the multiple changes baby & I have had to have when she spits up all over everything. Also, the heat/AC will have to be on during the day more as I am home with the baby. For example, we usually use a programmable thermostat to change the temperature 7 degrees cooler than we want it to be in the winter, but that won’t fly if someone’s home.

Also, you might want to factor in diapers and disposable nursing pads. And what about baby food? That will be needed for about 6 months of the baby’s first year.

I assume that your wife has a pump if she is going back to work. You might want to make sure it is still functioning well. Also, she will need breastmilk storage of some kind, right? That’s yet another expense.

What about bottles/nipples? These things wear out so I wouldn’t assume that you are completely going to rely on what you bought for your older daughter. Do you still have a new bottle brush to wash the bottles?

There are probably a few things I missed, but I have to run and feed my baby now.

While there’s definitely value in planning for the expenses for a new child, I think it can have negative side too when it causes you to put off having children because of the cost associated. So many people wait until “the perfect time” financially only to regret their decision to delay having children (while others may not).

We’ve had to stretch our budget & do things differently to “afford” our four girls, and right now it means that we’re not saving toward their college education, but that’s a conscious decision we’ve made, and I wouldn’t change having them even if I could!

EllenLangley25 | Jul 02, 2011 at 10:13 am

I propose not to wait until you earn big sum of money to buy goods! You should take the credit loans or just financial loan and feel yourself free

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